Impact of Outsourcing/Offshoring on IT

Ephraim Shwartz of Infoworld has a great piece on offshoring and implications for IT shops in the US. I couldn’t agree with him more that while there are cost benefits there are also other factors to consider when moving development offsite. In the end, it will require IT shops and professionals to redefine their roles. While the number of coders may go down in an IT department, there will be ample opportunity for developers to move up the value chain into design, architecture, and product management. This is definitely what many of my companies that outsource development have experienced (see an earlier post). As an investor, I want to make sure that whatver my companies do, that we own the core IP. In my mind, this means we have the design, architecture, and specs laid out onshore, the core engine or secret sauce developed in-house, and any non-core items offshored to the extent possible. Rather than worry about losing jobs offshore, let’s assume it will happen and focus on how we can get better and further move up the value chain on product development. From my perspective it is a pretty nice place to be-to architect, design and own your core IP and at the same time get product out the door much faster or much cheaper.